Why it matters

In a return to the use of opinion letters, the Department of Labor (DOL) released its first three under the Trump administration on the topics of travel time, garnishment of lump-sum payments for child support and payment for health-related rest breaks. On travel time, FLSA 2018-18 noted that compensable work time generally does not include time spent commuting to or from work, even if the job site varies from day to day. However, travel from job site to job site during a workday must be counted as hours worked for purposes of calculating wages, the Wage and Hour Division (WHD) said, as must business travel when it impacts regular work hours. With regard to the garnishment issue, the letter explained the “central inquiry is whether the amounts are paid by the employer in exchange for personal services,” in which case they will be subject to garnishment limitations. Alternatively, lump-sum payments that are unrelated to personal services rendered are not earnings. In FLSA 2018-19, the WHD considered payment for 15-minute breaks taken by employees because of a serious health condition. As short rest breaks primarily benefiting the employee are not compensable, these Family and Medical Leave Act (FMLA)-protected breaks do not need to be paid, the letter concluded.

Detailed discussion

Under the Obama administration, the Department of Labor (DOL) stopped the practice of issuing opinion letters, which answer specific questions that have been submitted to the agency and provide guidance for employers. With the change of administration, the DOL signaled its intent to return to the practice by reissuing some prior opinion letters.

Now the agency has gone one step further, releasing new opinion letters. In the first, FLSA 2018-18, the Wage and Hour Division (WHD) addressed the compensability of travel time for hourly technicians under the Fair Labor Standards Act (FLSA). The employer stated that its technicians do not work at a fixed location, instead moving around to different customer locations each day. Nor do the technicians have fixed schedules, leaving the employer confused about payment for time spent traveling to and from job sites, including plane flights.

Compensable work time generally does not include time spent commuting to or from work, the WHD said, but “[t]ravel between job sites after arriving at work, however, is compensable.” The use of a company car does not alone make the travel compensable, the letter added.

A trickier problem was figuring out how to compensate technicians for travel time such as taking a flight on Sunday for a training that begins on Monday, for example, when such workers do not have a regular workday. The WHD—after noting that in its experience, a review of employees’ time records usually reveals work patterns sufficient to establish regular work hours—suggested a few ways to calculate such compensation.

One method involved choosing an average start and end time for a workday; another option was negotiating with the employee to agree on a reasonable amount of time or a time frame in which travel outside of their home community is compensable.

“This is not an exhaustive list of the permissible methods for determining an employee’s normal start times or end times,” the WHD wrote. “But when an employer reasonably uses any of these methods to determine employees’ normal working hours for purposes of determining compensable travel time under [FLSA regulations], WHD will not find a violation for compensating employees’ travel only during those working hours.”

In the next letter, the WHD answered an inquiry about whether a nonexempt employee’s 15-minute rest breaks, which are certified by a healthcare provider as required every hour due to the employee’s serious health condition and covered under the Family and Medical Leave Act (FMLA), are compensable or noncompensable time. Employees who take these breaks are performing only six hours of work during an eight-hour shift, the employer said.

The Supreme Court has noted that the compensability of an employee’s time depends on “[w]hether [it] is spent predominantly for the employer’s benefit or for the employee’s,” the WHD explained. While short rest breaks up to 20 minutes in length primarily benefit the employer (and are therefore compensable), other types of rest breaks primarily benefit the employee and will not be paid, the letter noted.

“The specific FMLA-protected breaks described in your letter, however, differ significantly from ordinary rest breaks commonly provided to employees,” according to FLSA 2018-19. “As you note in your letter, the 15-minute breaks at issue here ‘are required eight times per day and solely due to the needs of the employee’s serious health condition as required under the FMLA.’ Because the FMLA-protected breaks described in your letter are given to accommodate the employee’s serious health condition, the breaks predominantly benefit the employee and are noncompensable.”

This conclusion was strengthened by the text of the FMLA itself, the WHD wrote, as the statute expressly provides that FMLA-protected leave may be unpaid.

The WHD offered one cautionary note, reminding the employer that workers who take FMLA-protected breaks must receive as many compensable rest breaks as their coworkers receive. “For example, if an employer generally allows all of its employees to take two paid 15-minute rest breaks during an 8-hour shift, an employee needing 15-minute rest breaks every hour due to a serious health condition should likewise receive compensation for two 15-minute rest breaks during his or her 8-hour shift.”

In the final letter, the WHD responded to a request for an opinion regarding whether certain lump-sum payments from employers to employees are earnings for garnishment purposes under Title III of the Consumer Credit Protection Act (CCPA). The employer asked for guidance because states are disparately applying the CCPA limits for child support withholdings.

The employer provided the agency with a list of 18 specific examples of the types of common lump-sum payment from employers to employees. “In determining whether certain lump-sum payments are earnings under the CCPA, the central inquiry for WHD is whether the employer paid the amount in question for the employee’s services,” the WHD said. “While not determinative, the frequency of payment may be a relevant part of the analysis.”

Three categories emerged from the list of 18 types of payments. First, the WHD identified lump-sum payments that qualify as earnings under the CCPA: commissions, discretionary and nondiscretionary bonuses, productivity or performance bonuses, profit sharing, referral or sign-on bonuses, moving or relocation incentive payments, attendance awards, safety awards, cash service awards, retroactive merit increases, payment for working during a holiday, termination pay, and severance pay.

“WHD considers these specific examples of lump-sum payments to be earnings under the CCPA because the reason for the underlying payment is to compensate the employee for personal services rendered,” the agency explained.

In the second category of lump-sum payments, certain portions qualify as earnings under the CCPA. Some of the payment for workers’ compensation and insurance settlements is designed to replace wages that would have been earned by the employee but for the work-related injury, or for back and front pay. However, any portion of the payment attributable to reimbursement for medical expenses or compensatory or punitive damages is not earnings under the CCPA, the WHD said.

Finally, only one example of lump-sum payments on the employer’s list did not qualify as earnings under the CCPA: buybacks of company shares. As the company’s intent is to reduce the number of its shares on the open market, not to compensate the employee for personal services rendered, such payments are not subject to the CCPA garnishment limitations, the WHD wrote.

To read FLSA 2018-18, click here.

To read FLSA 2018-19, click here.

To read CCPA 2018-1NA, click here.